Which Section Does Parents' Medical Insurance Come Under?

Parents’ Health Insurance and Tax Benefits: All About Section 80D

Investing in health insurance is one of the most effective ways to deal with unforeseen medical emergencies. It is also an excellent way to protect one’s financial stability in the event of hospitalization and gain access to quality healthcare without worrying about funds.

To encourage people to safeguard themselves with health insurance, the Income Tax Act facilitates deductions under Section 80D on the premiums paid. What’s more, health insurance premiums paid on behalf of parents are also eligible for tax benefits under this section.

Keep reading to learn more!      

What is Section 80D of The Income Tax Act of 1961?

Tax deductions up to ₹25,000 (₹50,000 for senior citizens) can be availed in a financial year under Section 80D of the Income Tax Act of 1961. Premiums paid for a health insurance plan or a health rider for a life insurance policy are eligible for an 80D deduction.

You can claim the 80D deduction for health insurance policies you purchase for your parents, spouse, kids, and yourself. Members of Hindu Undivided Families (HUFs) can also claim a tax exemption under Section 80D.

What are the Advantages of Section 80D Tax Deductions?

Some advantages of Section 80D are listed below:

● Preventive Medical Examination

In addition to the deduction for health plan premiums, you can get an extra ₹5,000 tax benefit for preventative medical exams within a fiscal year. However, this must fall within the total 80D deduction limit.

● Premium Deductions for Health Insurance

The premiums paid for a health plan or a term plan's health rider are eligible for tax deductions. This makes availing health insurance more attractive for individuals, along with providing them tax savings.

● Coverage for Family

Multiple family members are covered by the Section 80D deduction. You, your spouse, your kids, and your parents can all claim deductions on your health insurance.

● Advantages for Senior Citizens

Higher tax deductions of up to ₹50,000 are available to senior residents 60 years of age and older. This helps them get health coverage along with savings, which significantly boosts financial security in their retirement years.

● Promotion of Health Protection

The tax advantages provided by Section 80D can be viewed as a motivator for purchasing health insurance. Consumers are influenced to get health policies to ensure their financial security in the event of a medical emergency.

What are the Eligibility Criteria for Exemption Under Section 80D?

The eligibility for an exemption under Section 80D of the Income Tax Act of 1961 is listed below:

● Family Coverage

Health insurance purchased for oneself, one's spouse, dependent children, and parents is eligible for the deduction.

● Individual Eligibility

Section 80D allows Hindu Undivided Families (HUFs) and individual taxpayers to claim deductions.

● Health Insurance Plans

Under Section 80D, all medical insurance plans are eligible for the deduction. It is also available for health insurance riders, who may be applied to life insurance policies, including critical illness riders.

● Maximum Allowable Deductions

Individuals can claim 80D deductions of up to ₹1 lakh by considering the premium payments of themselves and their parents.  

How Does Age Affect 80D Tax Deductions?

The policyholder's age affects the amount of the tax deduction. Here's how:

● For a medical plan that covers oneself, one's spouse, and one's children under 60, an exemption of ₹ 25,000 may be claimed.

● A ₹25,000 deduction is allowed for parents under 60 who are covered by a health plan.

● A deduction of ₹50,000 can be applied to a plan that covers oneself, one's spouse, and one's children, who are all 60 years of age or older.

● For a plan that covers parents 60 years of age and older, a deduction of ₹50,000 may be applied.

● HUF members who are under 60 years old are eligible to deduct ₹25,000.

● A deduction of ₹50,000 is available to HUF members who are 60 years of age or older.

What to Keep in Mind to Claim 80D Deductions?

Here are a few pointers to keep in mind when claiming 80D deductions:

1. It is not possible to deduct the cost of medical insurance for a sister, brother, uncle, aunt, grandparent, or any other relative while claiming tax benefits.

2. Tax deductions cannot be claimed for premiums paid on behalf of employed children.

3. If you and your parent make a partial payment, you can both deduct the amount that each of you paid.

4. The deduction from the cost of the premium must be made without displaying any service tax or cess component.

5. The company-provided group health insurance premium is not deductible.

6. Any premium paid in a method other than cash is applicable for a deduction. Therefore, premiums paid online or with a credit card can also be deducted.

Medical insurance is not just a safety net – it is also a smart tax-saving tool when used right. Section 80D of the Income Tax Act encourages individuals to secure their family's health while enjoying substantial tax deductions.

By purchasing health insurance for your parents, especially if they are senior citizens, you not only provide them with essential financial support during medical emergencies but also reduce your overall tax liability.

If you are planning to buy a health insurance plan for your parents, consider Star Health. We provide cashless treatment facilities in 14,000+ network hospitals across India, along with coverage for a wide range of medical conditions.

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